agreed to buy Andora Energy's common shares owned by minority shareholders for US$1.7 million (US$0.044 per share) in cash, reported Research Capital Corp. analyst Bill Newman in a March 2 research note. This will take CanAsia's ownership of Andora's common shares to 100% from 88.2%.
The deal is expected to close by this month's end, noted Newman, and will likely catalyze CanAsia's stock.
"We view this transaction as positive," Newman added.
Research Capital maintained its Speculative Buy recommendation and CA$0.50 per share price target on CanAsia, noted Newman. The stock is currently trading at CA$0.22 per share, which implies a significant, or 127%, potential return on investment from here.
Stake in Resource To Change
Newman pointed out that with the transaction, the portion of the Sawn Lake resource net to CanAsia will increase to 100%, according to the updated resource previously prepared by Sproule Associates and effective Dec. 31, 2022.
The risked best estimate contingent resource net to CanAsia will increase to 248,200,000 barrels (248.2 MMbbl) from 218.9 MMbbl.
Accordingly, the after-tax net present value discounted at 15% of this resource will change to CA$198 million (CA$198M), or CA$3.98 per share, previously CA$175M, or CA$3.51 per share.
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